Chiefly L&E – Winter 2017 Newsletter (Updated)
Employment Law 2017
2016 brought many legislative changes to state and federal employment laws. Some of those changes went into effect last year, others go into effect at some point this year, and still others are in limbo, subject to legal challenges and appeals. In this newsletter, we are summarizing:
- Minimum wages in many of the states in the Northwest where our clients conduct business
- Existing whistleblowing laws applicable to public employers have been extended to non-profit employers, and whistleblowing laws have been expanded for both types of employers
- Update on Department of Labor overtime threshold
- Employees in manufacturing, factories, and mills: New BOLI guidance regarding calculating daily and weekly overtime
- Sick leave laws in Oregon, BOLI guidance
- Washington and California sick leave laws
- Changes to Oregon payroll law
- OSHA reporting changes, with implications for drug-testing policies
- Wellness program regulations
- Defend Trade Secrets Act (new language for handbooks and agreements)
- New obligations for entities and organizations that perform work on a Federal contract (either as a contractor or on a subcontract to a Federal contractor).
Keep in mind that the incoming administration has also stated there will be a repeal of the Affordable Care Act, and a general move toward de-regulating businesses, so some of the changes listed above are subject to still further legislative and/or executive action.
As always, stay tuned.
|Portland/Urban Growth Boundary||Rural/”Non-Urban”||All Other Regions|
For more information about the boundaries of each designated area, go to //www.oregon.gov/boli/WHD/OMW/Pages/Minimum-Wage-Rate-Summary.aspx or check out our 6/30/16 client newsletter, available here: //harrang.com/minimum-wage-laws-effect-july-1-2016/
Washington: Effective 1/1/17
|Seattle||501+ employees:$13.50 if contribute to medical benefits; $15.00 if no contribution||500 or fewer employees:$11.00 if contribute at least $2.00/hour toward medical benefits and/or employee earns at least $2.00/hour tips;$13.50/hour otherwise|
|SeaTac||Hospitality and Transportation Workers:$15.34|
|Tacoma||$11.15 for all employees who work more than 80 hours/year in city limits|
|All other regions||$11.00|
For more information, go to //www.lni.wa.gov/News/2016/pr161201a.asp; https://www.seattle.gov/laborstandards/ordinances/minimum-wage; //www.ci.seatac.wa.us/index.aspx?page=681; https://www.cityoftacoma.org/cms/one.aspx?objectId=89891
California: Effective 1/1/17
$10.00 for employers with fewer than 26 employees; $10.50 for employers with 26 or more employees. See https://www.dir.ca.gov/dlse/faq_minimumwage.htm for information about counting employees, annual increases, and exceptions.
$7.25 (no change)
Non-Profits Subject to Additional Whistleblowing Laws; Changes to Whistleblowing Laws for Non-Profit and Public Employers
Effective 1/1/17, employees of covered non-profit organizations have the same whistleblower protections provided to public employees. That is, non-profit employees will now be protected from adverse action based on complaints about or reports of “mismanagement, gross waste of funds or abuse of authority or substantial and specific danger to public health and safety resulting from action of” the employer.
The new law covers non-profit organizations that receive public funds through grant(s) or contract(s), and expands the definition of a protected “employee” to include board members.
An employer’s violation of this law will now constitute a Class A Misdemeanor, in addition to the potential civil liability.
Affected employers are required to implement policies that “delineate all rights and remedies provided to employees” under existing and new whistleblowing laws, and are required to “deliver a written or electronic copy of the policy to each employee.”
In the event of a claim or criminal charge against an employee for improper disclosure of confidential information, the employee’s “good faith and objectively reasonable belief” that a violation of law occurred will be an affirmative defense to the claim or charge. However, a public or non-profit employee or board member may still be subject to discipline, under existing law, if s/he discloses information that is: confidential pursuant to applicable law; “known to be false” or disclosed “with reckless disregard for its truth or falsity”; or that relates to the employee’s own misconduct.
A thorough explanation of whistleblower laws is beyond the scope of this update, however, a few additional points are noted here: (1) the new law does not replace existing whistleblower laws effective as to both public and private employers; (2) whistleblowing disclosures of supervisory and management level are protected to the same extent as disclosures by non-supervisory employees; and (3) individual supervisors and managers can be held personally liable for retaliatory actions in violation of whistleblowing laws.
Overtime Threshold Changes
21 states filed suit in the District Court of Texas, challenging the Department of Labor’s new threshold salary of $913/week for Executive, Administrative, and Professional exemptions, slated to go into effect on 12/1/16. The District Court granted the injunction, and the Department of Labor has now appealed. Pending the outcome of the appeal, the new rule is suspended at least as to those exemptions. (Some are speculating that the rule remains in effect as to the “Highly Compensated Employee” exemption).
It is impossible to predict the outcome of the litigation, but the incoming administration has vowed to reduce the regulatory burden on businesses, as mentioned above, so it is possible the appeal will be dropped and the rule will be withdrawn.
Overtime for Manufacturing Establishments
Under ORS 652.020, certain employees working in “any mill, factory or manufacturing establishment” are entitled to daily overtime whenever they work more than 10 hours in a day, as well as weekly overtime for all hours over 40 in a single workweek. In December, BOLI issued revised guidance, asserting that employers governed by ORS 652.020 must pay both daily overtime and weekly overtime, even though that conflicts with guidance issued by BOLI on its website and in its Technical Assistance Manuals, and even though the end result will be double overtime in some situation.
The Multnomah County case that apparently gave rise to the revised guidance is ongoing (Reyes et al v. Portland Specialty Baking, LLC), so there has been no judicial determination about whether employers legitimately relied on BOLI’s earlier guidance, or whether the new guidance will be upheld.
By now you know the basics: Effective 1/1/16, the new law requires employers to provide to their employees up 40 hours per year of legally-protected sick leave, for the employee’s or a family member’s illness, injury, medical treatment or preventative treatment, domestic violence leave, bereavement leave, or public health emergency leave. Employers inside the Portland city limits with 6 or more employees, and employees outside Portland with 10 or more employees, must provide paid leave, all others must provide job-protected leave, though the leave may be unpaid. There are notice and posting requirements, and a requirement to allow employees to roll over unused sick leave from year to year. Additional information:
- BOLI drafted interpretive regulations, which were subject to public comment and slated to be implemented, but at the last minute (late 2016) decided not to formally promulgate the regulations, and issued “guidance” instead.
- One key issue: Employers who provide a combined sick/vacation/personal time off policy may not simply count the first 40 hours per year as protected leave, but must track the reason for the absences, and may only consider an absence that would qualify for sick leave as “unprotected” after the employee has used the full allotment for sick leave purposes, regardless of how many other hours of non-sick leave the employee has used during the leave year.(Remember that other laws may protect the leave even after the employee has used up all available sick leave).
- The following counties successfully challenged application of the sick leave law on the basis that the notice and recording requirements constituted an unfunded mandate: Linn, Douglas, Jefferson, Malheur, Morrow, Polk, Sherman, Wallowa, and Yamhill. As you might expect, the Department of Justice has requested reconsideration. This decision affects only these counties as public employers; state agencies and private employers in those counties are still subject to the sick leave law.
Seattle, SeaTac, and Tacoma currently have some form of required sick leave for some employees working inside the city. As of 1/1/18, all Washington employers will have sick leave obligations very similar to those in Oregon, except that the requirement will be to provide 1 hour of sick leave for every 40 hours worked.
Since 7/1/15, California has had a paid sick leave law that is similar to Oregon law but provides up to 24 hours per year rather than 40 hours per year.
As of 1/1/17, employers may only provide an electronic paystub if the employee expressly agrees, and has the ability to print or save the paystub upon receipt.
Also as of 1/1/17, all paystubs must have the following information: Name, address, telephone number, and business registry or identification number of the employer; name of the employee; date of the payment and dates of work covered by the payment; gross and net wages; rate or rates of pay; whether the employee is paid by the hour, shift, day or week or on a salary, piece or commission basis; amount and purpose of each deduction; allowances claimed as part of minimum wage; and (for non-exempt employees) the regular hourly rate, overtime rate, number of regular hours worked and pay for those hours, and number of overtime hours worked and pay for overtime hours.
Additional rules apply regarding piece-rate work.
OSHA Incident Reporting
All employers with 10 or more employees (except certain “low risk” industries) must record covered workplace injuries and illnesses on forms 300A, 300, and/or 301. Beginning in 2017, covered businesses must begin submitting their reports to OSHA electronically, some of which will then be posted on OSHA’s website, on the following timeline:
- Establishments with 250 or more employees in covered industries must submit information from their 2016 Form 300A by 7/1/17. These same employers will be required to submit information from all 2017 forms (300A, 300, and 301) by 7/1/18. Beginning in 2019 and every year thereafter, the information must be submitted by March 2.
- Establishments with 20-249 employees in “high risk industries” must submit information from their 2016 Form 300A by 7/1/17, and their 2017 Form 300A by 7/1/18. All information must then be submitted by March 2 of every year, beginning in 2019.
Update: As of April 10, 2017, the Department of Labor’s OSHA website states, “OSHA is not accepting electronic submissions of injury and illness logs at this time,” and notes the website will provide updates as they become available.
See https://www.osha.gov/recordkeeping/NAICScodesforelectronicsubmission.html for a list of the affected “high risk industries.”
According to OSHA, the new regulations are designed to: “Encourage employers to increase their efforts to prevent worker injuries and illnesses, and, compelled by their competitive spirit, to race to the top in terms of worker safety; and enable researchers to examine these data in innovative ways that may help employers make their workplaces safer and healthier and may also help to identify new workplace safety hazards before they become widespread.”
The rule requires employers to notify all employees of the procedure for reporting work-related injuries and illnesses, that employees “have the right to report work-related injuries and illnesses,” and that employers “are prohibited from discharging or in any manner discriminating against employees for reporting work-related injuries or illnesses.” The rule does not require such notice to be in writing, but we encourage you to implement the rule through a written policy, sent to all employees, for which you require a signed acknowledgment.
The rule reaffirms posting and anti-retaliation obligations, and clarifies the existing implicit requirement that an employer’s procedure for reporting work-related injuries and illnesses must be reasonable and not deter or discourage employees from reporting.
Although not expressly stated in the new rules, OSHA has expressed its view that “blanket post-injury testing policies” are not “reasonable,” because they might deter a worker from reporting an injury. Therefore, OSHA suggests “reasonable suspicion” drug testing policies, and policies that “limit post-incident testing to situations in which employee drug use is likely to have contributed to the incident and for which the drug test can accurately identify impairment caused by drug use.”
The new provisions were effective 8/10/16, but OSHA delayed their enforcement until 12/1/16.
Protecting Trade Secrets
As of May 11, 2016, the Defend Trade Secrets Act allows employers access to federal courts and multiple remedies for misappropriation of trade secrets only if they expressly notify employees of their rights under the Act, in their employment agreements, confidentiality/non-disclosure agreements, and non-competition/non-solicitation agreements. Although the Act supplements rather than taking the place of state trade secrets laws, the additional remedies are significant enough that employers who have serious concerns should simply incorporate the language from the Act into their agreements and policies.
“Immunity from Liability for Confidential Disclosure of a Trade Secret to the Government or in a Court Filing:
(1) Immunity—An individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that—(A) is made—(i) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
(2) Use of Trade Secret Information in Anti-Retaliation Lawsuit—An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual—(A) files any document containing the trade secret under seal; and (B) does not disclose the trade secret, except pursuant to court order.
In May, 2016, the EEOC implemented new wellness program regulations, applicable to programs effective after 1/1/17. The regulations allow employers with qualifying wellness programs to provide a reduction in the employee cost of health insurance premiums by up to 30%, for any employee who voluntarily participates in the wellness program.
The EEOC’s final regulations apply only to self-coverage, which conflicts with the Affordable Care Act provisions allowing the incentive for all coverage (including family coverage). The final regulations also conflict with the ACA’s provisions allowing up to 50% incentive for participating in tobacco-cessation programs.
The AARP sued the EEOC, seeking injunctive relief (that is, a suspension of the new rule), but the court declined to issue an injunctive order. The litigation is not over, but at least for now the regulation remains in effect.
New forms were made available in November of last year, and must be used with new employees by 1/22/17.
Effective for contracts entered into on or after 1/1/17:
Some***Federal contractors and subcontractors must provide up to 56 hours per year of paid sick leave to all employees working on the applicable contract, at the rate of 1 hour of sick leave per 30 hours worked. All affected contracts must include specific language citing the contractor’s sick leave obligations.
There are many similarities between Oregon’s sick leave law and Executive Order 13706, but also a few key differences:
- Family member is defined to include “any individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship”;
- Once medical verification has been requested, the employee has 30 days to provide the verification; the health care provider does not need to have actually seen the employee in order to provide valid verification;
- There is no exception to the medical verification rules for “suspected abuse” of the sick leave policy;
- Denials of requested sick leave must be in writing, and must explain the reason;
- Only a human resources or manager may contact the health care provider who provided verification (not the supervisor), and only for authentication;
- Front-loading the leave does not exempt an employer from the requirement to allow an employee to carry over at least 56 hours of unused sick leave to the next year;
- Unused sick leave must be reinstated to any employee rehired by the same contractor or successor entity within 12 months after a job separation.
*** The following are specifically included under the new law: procurement contracts for services or construction covered by the Davis Bacon Act (DBA); contracts for services covered by the Service Contract Act (SCA); contracts for concessions, including any concessions contracts excluded from coverage under the SCA by DOL regulations at 29 CFR 4.133(b); and contracts in connection with federal property or lands and related to offering services for federal employees, their dependents, or the general public.
The following are specifically excluded: grants; contracts with and grants to Indian tribes; agreements exempt under the SCA; procurement contracts for construction exempt under the DBA; employees with a CBA granting at least 56 hours of paid sick leave (except that the CBA will need to be fully compliant as of the next renewal after the effective date of the Executive Order); and employees whose work on covered contracts takes less than 20% of their weekly working hours.
Under the Fair Pay and Safe Workplaces Executive Order (partially enjoined by court order), employers with Federal contracts or subcontracts valued at $500,000 must provide to any employee working on the contract or subcontract a “wage statement” each pay period containing certain information. The Department of Labor issued guidance indicating that compliance with a “substantially similar” state law will be considered sufficient, and Oregon and California are among the states listed as having “substantially similar” paystub laws.
Independent Contractor Notice
Also under the currently enforceable sections of the Fair Pay and Safe Workplaces Executive Order, employers with Federal contracts or subcontracts valued at $500,000 or more must provide a written notice to each independent contractor who is providing services on the contract or subcontract, prior to beginning work, that states that the person is an independent contractor, does “not indicate or suggest that the enforcement agencies or the courts agree with the Contractor’s determination that the worker is an independent contractor.” The notice must “be separate from any independent contractor agreement between the Contractor and the individual,” and must be provided for each Federal contract or subcontract on which the independent contractor works.
Nothing in this communication creates or is intended to create an attorney-client relationship with you, constitutes the provision of legal advice, or creates any legal duty to you. If you are seeking legal advice, you should first contact a member of the Labor and Employment Team with the understanding that any attorney-client relationship would be subsequently established by a specific written agreement with Harrang Long Gary Rudnick P.C. To maintain confidentiality, you should not forward any unsolicited information you deem to be confidential until after an attorney client relationship has been established.
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